Good day. Thank you for standing by. Welcome To the Q2 2021 Tenaris S.A. earnings conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a Q&A session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Giovanni Sardagna. Please go ahead. Thank you, Gigi, and welcome to Tenaris 2021 second quarter conference call. Before we start, I would like to remind you that we will be discussing forward-looking information in the call, and that our actual results may vary from those expressed or implied during this call. With me on the call today are Paolo Rocca, our Chairman and CEO, Alicia Mondolo, our Chief Financial Officer, Guillermo Vogel, Vice Chairman and member of our Board of Directors, Germán Curá, Vice Chairman and member of our Board of Directors, Gabriel Podskubka, President of our Eastern Hemisphere Operations, and Luca Zanotti, President of our U.S. operations. Before passing over the call to Paolo for his opening remarks, I would like to briefly comment our quarterly results. Our sales in the second quarter of 2021 reached $1.5 billion, up 23% compared to those of the previous year, and 29% sequentially, mainly driven by a recovery in sales in North and South America, but with sales increasing in all our reporting regions. Average selling prices in our tubes operating segment declined 6% compared to the corresponding quarter of 2020, but increased 6% sequentially as higher prices are compensating higher raw material costs. Our EBITDA for the quarter, which included an extraordinary gain of $33 million from the recognition of fiscal credits in Brazil, was up 54% sequentially to $301 million, reflecting higher volumes and our good industrial performance. Our EBITDA margin was up at around 20%. Our quarterly net income of $294 million benefited again from a strong contribution from our investment in Ternium and Usiminas. During the quarter, working capital increased by $314 million, mainly due to higher inventories, which reflect the increased levels of activity. Cash used in operating activities during the quarter was $50 million, with capital expenditure of $51 million. Our free cash flow for the quarter was negative $402 million. After a dividend payment of $165 million in May, our net cash position declined to $854 million at the end of the quarter. I will ask Paolo to say a few words before we open the call to questions. Thank you, Giovanni, and good morning to all of you. As we ramp up our activities to meet higher demand, Tenaris is acting on all fronts. We are hiring and training new employees as we increase production throughout our global industrial system. Our team is managing disruption from the ongoing effect of the pandemic and confronting rapid increases in raw material and logistic costs. Once again, our team is demonstrating the resilience and capacity to respond to changing condition that is a hallmark of our company. In this dynamic environment, our second quarter results show the progress we are making in North America and the rest of the world. For the second consecutive quarter, our sales in North America increased by more than 30%, as we extended our Rig Direct sales model and fully recovered the market position in the U.S. that was affected during the lengthy IPSCO takeover process. We are moving quickly to bring production at Baytown to full capacity, to step up production of billets at Koppel for our U.S. and Canadian seamless pipe mills, and to bring online our Ambridge mill and the Baytown finishing facility in Houston. Since October of last year, we have taken on 700 new employees in the United States and plan to hire a further 450 by the end of the year. Digital integration is a key feature of our Rig Direct service, both in the United States and around the world. We now have 50 customers using our Rig Direct portal around the world who account for 50% of all items ordered under our Rig Direct program. Within this program, we also offer full pipe traceability through our PipeTracer application. In South America, sales are also recovering. In Brazil, Petrobras awarded us the contract to supply sour service and high alloy seamless casing for the Libra pre-salt field. Petrobras will use our seamless product, including our Dopeless and PipeTracer technology, in the Brazilian deep offshore, an important step in our positioning in this market. The Libra Discovery, now renamed the Mero, is one of the world's largest and most important deepwater fields. The reservoir in the Santos Basin is located 4,000 m below the seabed at a total depth of 5,900 m. Has estimated total recoverable reserves of 3.3 billion bbl, and the development plan aims for a production rate of 720,000 bbl a day. In Argentina, we began offering pressure pumping and coiled tubing services in Vaca Muerta as a complement to our full Rig Direct service in the country, with a backlog worth $70 million over the next 12 months. Worldwide, we expect to invoice around $400 million in service and accessories over the same period. With these services, we have the opportunity to reinforce the relationship that we have with customers and extend our knowledge of operating conditions. In Europe, industrial production has been recovering following the pandemic. New sales opportunities in hydrogen storage, carbon capture, and storage infrastructure, and the section of electrical grids are appearing in connection with the energy transition. In the industrial sector, I would like to highlight our global automotive business, where we expect to invoice around $200 million this year, with over 50% coming from tubes and components for airbags, a segment in which we have a 40% global market share. To meet the demand growth in this sophisticated segment, we are expanding our component facility in China. This quarter, our sales growth amounted to 29%. We expect that our sales will continue to grow in the coming quarters. As we move into 2022, we should also see a stronger contribution from the Eastern Hemisphere with the large backlog of orders we have in the Middle East that we discussed in our previous call, and the reactivation of activity in some offshore projects in Africa and the North Sea, where we are well-positioned. The substantial increase in raw material costs that we have seen since the beginning of the year are just starting to appear in our cost of sales. It will not be until the fourth quarter that they are more fully reflected. Prices are also increasing with some lag, particularly in North America, as drilling activity recovers and tubular inventories held by distributors decline. Against this background, we are confirming our guidance for a 20% EBITDA margin level during this third quarter. As the world prepares for the COP26 climate summit in Glasgow, with expectations that current decarbonization targets will be reinforced, with more specific action in support of those targets, Tenaris stands ready to contribute with the investment in decarbonization that we have committed to carry out over the coming years. More customers are asking us about our carbon emission and how we plan to reduce them, and we see this as an opportunity to reinforce our competitive differentiation. I will leave the floor open now for any questions you may have. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from the line of Ian Macpherson from Piper Sandler. Your line is now open. Thank you for taking my question. I guess I wanted, Paolo, to follow up on your comment regarding the material cost inflation that will be more fully reflected by the fourth quarter as opposed to the third quarter. Does that present any risk that the 20% EBITDA margin will just be sort of a one-quarter event? On the other hand, do the throughput and price increases that you have coming through give you confidence that you're going to hit 20% margins and stay there with the platform to improve next year? Well, thank you, Ian. We are estimating an increase in our top line, and in the range of, let's say, low double digits for the next quarter. Okay. We are estimating the EBITDA margin in the range of 20%, considering how the increase in the cost of input and raw material is getting into our cost of sales. There could be risk on it. Some of this may come from disruption in the logistics or in some specific issue. Some could also be related to the pandemic. In general, I think that we should be able to achieve this level of margin, considering the price increase that we know are embedded in the contract for this third quarter, and basically, the level of cost that we have in our inventory. Okay. That's great. Thanks. I was going to ask also, just looking ahead to 2022, when the Eastern Hemisphere is going to materialize in a bigger way than it has so far this year. Generally speaking, historically for Tenaris, that is a higher margin hemisphere for you, is it not? That would be a tailwind for margins? Yeah. Thank you for your question. You're right that in 2022, we will increase our shipment to the Middle East. In fact, the mix of our product is pretty poor in the second half of 2021, will improve going on during 2022. Maybe Gabriel, you can give more color on the timing of the contract and the backlog that we have in your region. Sure. Thank you, Paolo. Good morning, Ian, and thank you for your question. Yeah, indeed, we see drilling activity in the Middle East that started to pick up in the recent months. This is something that a positive trend that we expect to continue as OPEC enters in the phase of production increases. Recovery is being gradual, but the signs are very clear and consistently positive. We are seeing rigs being added, large projects reactivating, for example, Marjan and Zuluf, two large projects in Saudi Arabia. We expect the new tenders in Saudi as well coming to market for demand in 2022. In the other three core markets of the region, UAE, Kuwait, and Qatar, as you know, the large OCTG tenders have been already played. We are well positioned there by our backlog of multi-year contracts. This will start impacting in 2022, likely in the second quarter of 2022 will be the first strong sign of this. It will depend on drilling plans, top management, and also core placement. Overall, we expect the shipments in the Middle East to remain broadly flat in the second half of 2021 compared to the first half of 2022. In 2022, we should see a recovery path, estimating probably a double-digit growth in the first half versus this current half, given the contract that we have. In those contracts as well, we have formulas. With the NOCs, we have formulas reflecting both costs and market indicators. There is typically, in this region, a lag, so it will take some time, but also there's going to be some pricing adjustment to the cost situation in these Middle East contracts as the year 2022 progresses. That's most helpful. Thank you both very much. Thank you. Thank you. Thank you. Our next question comes from the line of Igor Levi from BTIG. Your line is now open. Good morning, guys. Could you provide some more color on your energy transition initiatives in carbon storage and hydrogen, and how the project recently awarded been coming along? Are there any new projects you guys are bidding on that are on the horizon? Thank you, Igor. We are following a number of project. Our exposure to the energy transition related business is increasing. It's mainly focused on projects for carbon capture and use and storage, like the Northern Lights. This is a project that we will see, we will be shipping this during 2022. This kind of project, we are monitoring what's happening, in different region. Let's say many of these are still in a stage of design and engineering. Other area related to the energy transition in which Tenaris is acting is cylinder for hydrogen. We are working and we're increasing our shipment of cylinder for storage, for service station. There are supplying project that today I would say are still pilot project. We do not see yet massive project, in this area. These projects are similar to the one that we also, as a company, have in our mill in Dalmine that we will develop for this. I would say that the stage of this project is still a level of pilot project. We are also looking in all the action that should be taken to transform infrastructure from gas to include a component of hydrogen, that may require tubular product or substitution of pipeline also. Even there, I would say that this is still at the very beginning, let's say, of the process. We are also exposed to geothermal. That is a small niche. These are not volume that will move, will change, let's say, the overall exposure of this. Geothermal, CCS, the large vessel for hydrogen. These are areas in which we are operating, and there are also some in the biomass, in which we have, let's say, participation. I would say that it still is small part of our business. We'll be increasing. We need to be participating in this pilot so to have the chance to be part of project when they are launched, as in the case of Northern Lights. Great. With 20% margins just a quarter away, what would it take to get back above 25% levels seen a decade ago? Would an offshore recovery be required, or could increased onshore demand and stronger pricing get us there? Well, I think that after, let's say, the pandemic and the impact on the investment, the market is recovering strongly, and some change is happening in the market. Today, I would say it's much more based on regional situation. In some region, we perceive that the increase in demand is giving us some more pricing power, and this is visible and is important to increase our EBITDA margin. In some other region, the supply-demand balance is still pretty tight, and the situational pricing is different. The restriction to trade, the strategy of the oil companies in the different region, the redefinition of the supply chain are creating some kind of regional fragmentation in this. We see that we are recovering pricing power in some region in which the demand is increasing pretty fast. During 2022, I think that we will see this trend to proceed when the pandemic will fade out compared to where we are today in many regions of the world, not only in Europe or U.S. Today, still, the pandemic is affecting the economies in the emerging market, and this is a factor. If you ask me when this trend will recover, I cannot tell you if this will happen in some moment during second half of 2022 or before. It will depend also from factor like the stabilization of the economy and the measure of stimulus for the economy that may be taken, in particular in the United States. Great. Thank you for the color. I'll turn it back. Thank you. Our next question comes from the line of Marc Bianchi from Cowen. Your line is now open. Thank you. I first wanted to ask about the third quarter, just to clarify. In second quarter, we saw the fiscal credits from Brazil help the margin. I'm just curious if there's anything that might be like that helping your third quarter margin. Yeah. Thank you, Marc. I would ask Alicia to give us a comment on possible extraordinary factor that may affect third quarter. Thank you, Paolo. Good morning, Marc. Actually, we are not expecting another extraordinary impact in the third quarter. This was very extraordinary and was something what have been resolved at the Brazilian justice. Now we are not expecting any more like this. Great. Thank you for that. In the prepared remarks, you mentioned pressure pumping and coiled tubing services in Argentina. I'm curious what the aspiration is for adding these types of services, maybe as a percentage of your business over time, and how do you think about that from a margin perspective versus the rest of the business? Well, we're moving in in this service as a complement to our Rig Direct. We perceive that the client, especially in the local market in which we have built a strong trust relation with our client, are very open and very willing to have our support in this service that are indirectly related to tubulars. In the case of Argentina, we decided to move in. We see this as a profitable business. The first year invoicing will be in the range of $70 million. We plan to expand this service only in the market in which we have a very strong route, and in which we can complement a full package of supply from pipes to tubing to casing, and services that are related to the column and to the completion of the well. Clients are trusting our ability to execute, and we are doing a pretty good job. We decided to step in that situation, we see this as profitable. We will not move in the market in which there is very high competition and in which these services are much more commodity. There are areas in which this could be really complementing what we are doing in service to the client. That is why in the prepared remark, I also mentioned that as a whole, our invoicing of pure service with no tubulars are a figure in the range of $400 million is pretty relevant for our top line. Mm-hmm. Wonderful. Thank you very much. Thank you. Our next question comes from the line of Vlad Sergievskii from Bank of America. Your line is now open. Thank you, and good morning. Thanks for taking my questions. I will start with the two. What are the key contributors to revenue growth in the second half of the year? Is it volume? Is it price? Is it mix? Is it everything? What are the key regions that are driving growth? Another one on the margin progression through the second half of the year. You obviously gave us the reference for third quarter, and you highlighted that there will be cost inflation in the fourth quarter. I'm wondering whether top line growth and perhaps better pricing in the fourth quarter will be sufficient to offset this cost pressure in Q4. Are there other factors in play? Yeah. Thank you, Vlad, for your question. As I mentioned before, we expect our sales and top line to increase in the range of low double-digit in the next quarter and to grow again in more or less in the same region in the fourth quarter. Volume for sure will act. Price will also have a relevance because in the end, the price, as you can see in the Pipe Logix, are getting into our long-term contract, in our Rig Direct agreement. We are, in this sense, coming with a lag because in the end, we are not selling in the spot market, we're more selling in the agreement. The price is entering into our top line with a lag. This will be a factor. Mix in the third and fourth quarter will act again, because in the end, growth will be very concentrated in North America. We will have a mix that is comparatively more poor compared to the mix that comes from the international project, and especially from the complex project in the offshore, that in my view, will be coming on stream later on during 2022. The cost increase will also be contained by the absorption, because in the end, the increase in the volume is giving us improvement in the absorption. We are stepping up activity in the U.S., but we're putting into operation mills that has been idle for more than two years. In some case, we have additional cost. We are hiring more than 1,000 people. We need to train them. This is something that we are doing today. Some mills, like Koppel, is ramping up. Some other, like Ambridge, will ramp up. We are training the people, so we have some cost now that we think will gradually be absorbed when the mill will be fully operational. All of these component are giving us this reference on which we are guiding. As I was saying before, the pandemic is a risk, because in the end, we are trying to do what we can to have our people vaccinated, but there are countries in which we have no access to vaccine, and the vaccination is moving slowly, and in which always industrial operation are at certain risk of disruption. Also, another risk that I mentioned is always the logistic, because increase in the activity worldwide is putting strain on logistic on water, on logistic on rail, on many of the issue, for instance, related to container. These are issues that could also, to some extent, affect us, hopefully not so much as other industry like the automotive. This is the factor that are having an impact on our margin. I hope that this will answer to your question. Yes, absolutely. Thank you, Paolo. It's very comprehensive and very clear. Can I ask a follow-up question on the U.S. marketplace? How much spare capacity do you have seamless mills, do you think have at this moment? Is there a line of sight on U.S. seamless complex being fully utilized with demand getting better? What needs to happen to U.S. OCTG prices to incentivize welded mills to start producing? Obviously currently spreads are very low. Well, I will ask here to Luca to answer. We are putting into operation a plant like Ambridge. We have capacity that is coming in, and we have potential. Luca, maybe you can give an answer on the two question, one on the capacity, and the other one, when the welded will enter into the field. Yes. Thank you, Paolo. Good morning. Good morning, Vlad, and thanks for the question. In terms of capacity, we are adding capacity. When you look at the activity ramp-up that we see through the end of the year, when you look at the reconsumption is growing. When you look at the inventory, now inventory are below the five months. I got to touch the cost of steel later on the second question. You see that capacity is coming in, our competitors are ramping up. The factor that I described before are going to make the market, in my opinion, significantly tight, going into the fourth quarter in 2022. As to your second question, which is what would take to get the ERW domestic back. If you look at the HRC prices, and you consider that this is more or less where, on a level, the ERW are buying, you will need to see a jump, a significant jump in the price of pipe before this can get back. This will provide additional strength to the price. Now, how much this can be? Well, it's difficult to estimate. Today, there is no spread between the Pipe Logix and the ERW prices. You will need to assume a significant step up to see this component of the local production to come back significantly. This is basically it. I I will turn it back. Thank you. Thank you very much. That's very helpful and clear. Thank you. Our next question comes from the line of Connor Lynagh from Morgan Stanley. Your line is now open. Thanks. I just wanted to stay on U.S. capacity. Just wondering if you could clarify for us how we should think about your effective capacity trending as you're ramping towards full capacity at some places, reopening in other places. Basically, how much sales capacity or sales volume do you think we should account for over the next few quarters and at what pace? Thank you, Connor. I think, Luca, maybe you can add some comment on this. Connor, keep in mind that Tenaris, for the U.S., is a pretty complex and extended system. We arrived there from Bay City, from Ambridge for seamless. We have a finishing facility in McCarty, in Baytown, Hickman. Hickman has capacity also for welded. We are arriving there from Canada. Canada, in this moment, is ramping up also. Canada has capacity outside of the season in Canada. There are quarters in which we have also additional capacity from there. Mexico and the rest of the system could support for specific product and so on. In the end, our production comes from different sources, and we have space for responding to an increased demand in the market. I don't know, Luca, if you want to, or you have some color, more specific, if the program for capacity comes from the difficulty to hiring people, or you think that the investment plan underway will also be a factor for expanding capacity? Can you comment on this? Yes, Paolo. Thank you. Good morning, Connor. Well, I believe that you articulated pretty well the complexity and the sophistication of our supply system to the U.S. As far as capacity in the U.S. is concerned, we have, with the plan that we have in place, capacity to follow the growth that we see for our customers, and we know this very well because with our Rig Direct programs, we know what the activity is going to be in the short and the medium term. There may be constraints, and you correctly said this. We don't know what is going to be the effect of the pandemic now with this variant, and how much this is going to or may, let's say, affect operations. This is not a nice problem. This is an economy problem. It is very difficult for me today to give you an exact estimation of what this impact will be. In general terms, we are at the capacity to follow the growth of our customers as they are communicating us in our weekly forecasting meeting. Okay. I understand. I take the point on the global system, with the North American system. Certainly I can infer from the fact that you're opening additional capacity that you're either seeing incremental demand from other regions that those non-U.S. mills serve or incremental U.S. demand. I guess, could you just update on a more global sense, are you seeing the need to add shifts or reopen or accelerate capacity elsewhere outside of the U.S. as well? Well, we incorporated, in the last month, around 4,000 people in our system, apart from the, let's say, including what we mentioned for the U.S. We are responding on a global level to the increase in demand, to prepare the system for supporting the increase that I mentioned in the top line for the next two quarter. What I can tell you is that the increase in the sales in North America are running at a pace higher than the overall increase that I mentioned for Tenaris. North America is the most dynamic market in this moment. All right. Thank you very much. Thank you. Our next question goes to the line of Alan Spence from Jefferies. Your line is now open. Thanks, and good afternoon. Most of my question's been taken, so I just have one remaining, and it's around tax. The effective tax rate in the P&L was very low in the second quarter. I was just wondering if you could talk about what drove this and how you see that progressing from a rate perspective in the coming quarters. Well, thank you, Alan. I will ask Alicia to give us a view of the, let's say, the evolution that we may expect in our tax line. Okay. Thank you, Alan. Thank you, Paolo. Hello, Alan. We are expecting for the rest of the year an effective tax rate from 20%-22%. In this quarter, you see a smaller effective rate because we have many effects coming from inflation adjustment in the country where this allow, like Mexico and Argentina. In Argentina, in this quarter, the Congress approved an increase of the tax rate from 30%-35%, it has been offset because of the effect of the inflation adjustment. We are still expecting this effect for the rest of the year because we are forecasting that the inflation adjustment will be higher than the devaluation effect. This is the reason because we are expecting this kind of effective tax rate for the rest of the year. I don't know if this answer your question. Yes, it did. Thank you very much. Thank you, Alan. Thank you. Our next question comes from the line of Vebs Vaishnav from Coker Palmer. Your line is now open. Hey, guys. Thank you for taking my questions. Maybe if I can start with, we already have won ADNOC and KOC orders, and I think you mentioned some Saudi Arabia contracts. How should we think about the magnitude of the revenue step up from 2021 to 2022 from those projects? My thinking is that could be maybe around $400 million revenues step up. What I'm trying to see is if there are any offsets from any projects rolling off. Thank you, Vebs. The question here is the contract, the change between 2021 and 2022 in Saudi Arabia. Gabriel, maybe you can pick up this question. Paolo. Thank you, Vebs, for the question. The increase will be gradual during the year 2022. As we said, volumes in Q2 2022, and then also adjustment in prices according to the formula. We see this as a growing trend. We are not giving specific figures on the increase. We said that is on the high double digits. It will be important, but we'll keep it there. I would not disclose any more information. There are specific issues about stock management drilling programs that will fine-tune the pace of growth, but it will be important compared to 2021. Got it. Okay. Maybe switching to near term. You guys talked about low double-digit revenues in 3Q, 20% EBITDA margins in 3Q, and maybe similar revenue growth in 4Q. I guess, from investors' point of view, what would be helpful is if you can talk about, can we maintain this 20% EBITDA margins in 4Q and probably in 2021, just given the concerns around inflation, but maybe offset by cost absorption, better mix? It would be helpful just to think about directionally how the EBITDA margins progress from beyond 3Q. Thank you, Vaibhav. I think this is going in line with the previous answer on margin. Here, there is a volume effect. Increasing volume has a positive impact on cost. That contribute to offset the cost inflation that we are seeing in our cost of sale. There is a price effect. Increase of price, the Pipe Logix is a good reference, especially for North America, is getting into our top line, and this is contributing to this margin of 20% that we estimate. As I say before, the mix of product for all of Tenaris is playing on the other way, because in the end will be a quarter with a relatively low level of premium product as a share of our global sales. When you consider this different factor are guiding, are supporting our estimate of the margin for the third and the fourth quarter. Okay. That's all for me. Thank you for taking my questions. Thank you. Our next question comes from the line of Stephen Gengaro from Stifel. Your line is now open. Thanks, and good morning. Good afternoon, gentlemen. Just a quick one for me. When we think about what some of the larger service companies have said about international growth, sort of Eastern Hemisphere growth, they're talking about double-digit plus growth in 2022. Curious, in an environment like that, and maybe the similar question for kind of a double-digit growth rate in the U.S. market, how do you think you guys perform on a relative basis from a top-line perspective? I don't have here a close comparison. What I see is that usually, we are moving in parallel to on the top line with all of the oil service company. We follow this. Usually, if you look over time, you see that we have been able to follow or to top the evolution of sales and top line of a major service company. In this case, concerning the Eastern Hemisphere and the perspective of 2022 and the project for offshore that is supporting the statement and the evaluation, the estimation of the oil service. Gabriel, you can add something, some comment on this, to understand if this rate of increase in the overall business is in line with what we see there. Sure, Paolo. In fact, we see the offshore, in addition to the Middle East, also on a recovery path. Within the Eastern Hemisphere, we are seeing a positive dynamics across areas. The North Sea is in motion. Both Norway and U.K. are active. In fact, during this quarter, we captured a new LTA with Vår Energi in Norway, to supply their full needs of OCTG, a very rich mix, and also services. As you mentioned, also the North Sea, like the rest of Europe, will be a leading area for the energy transition, where several CCS studies are underway. We are seeing positive dynamics there. We see also some projects proceeding in the offshore Mediterranean. We have just secured a relevant contract with Mellitah, Eni in offshore Libya, covering OCTG needs for the 30 wells. This will start impacting also in 2022 and beyond. Finally, also Sub-Saharan Africa is offering some initial positive signs after two very tough years. I would highlight also Angola as a promising spot. We have there indications of an increase in activity underway. This will support gradually increase of our OCTG and line pipe products in this part of the world. Finally, Southeast Asia is also showing some reactivation of projects. I would highlight Indonesia, Australia, and Papua New Guinea as positive contributors in the offshore in 2022. This is regarding Eastern Hemisphere, but probably it's important to consider in the specific deepwater space that activity is strong in the Americas, whereas today, 50% of the global drill ships and semi-subs are operating. If you consider Brazil, Gulf of Mexico, both sides of the border, and Guyana as well. Again, we believe that there is a path of recovery in the offshore, and this will be a positive contributor in 2022 and onwards, supporting the double-digit trajectory that we talked about and in line with the service companies. Thank you, Gabriel. I think just let me add one thing that is differential between ourselves and the oil service company. In this moment, the level of price of the hot-rolled coils is putting a drag on our welded pipe competitor for line pipe and for OCTG. This has a positive effect for us in North America for OCTG, but also has a positive effect on our space for the line pipe, because in many case, we can, let's say, capture with seamless project that otherwise could be captured by welded pipe in different region. This is something differential. In the end, the high price of hot-rolled coils is positive for us, not only because we also have good results from our participation in Ternium. Just as a follow-up to that, it's interesting. Historically, when HRC was rising and activity was fairly strong, I believe, and I have to go back and look at the exact numbers, but there clearly, it seemed like you generated pretty strong margin expansion off of that and the ability to recover plus and boost margins. Is that a potential strong headwind, or excuse me, strong tailwind to margins next year? And could 20% of the bogey kind of be on the low side? Well, yeah, in general, you are right. The increasing price of hot-rolled coils is beneficial for us. You have to keep in mind that in the case of hot-rolled coils, the market declined much less during the pandemic and reacted much faster than the market for oil and gas services. The pandemic then low down in the investment by the oil industry because of mobility and reduction in demand, hit on us much more than the flat product. We are starting from a different level, much lower in term of overall market worldwide. You are right, the high price in hot-rolled coil are, in general, positive for us. Great. Thank you for the color. Thank you. Our next question comes from the line of Luigi De Bellis from EQUITA SIM. Your line is now open. Yes. Good afternoon to everybody. I have three questions. The first one is on the pricing. What do you expect from the Pipe Logix index in the coming months, considering the supply-demand balance and inventories level? Do you expect the positive trend to continue in the coming months? The second question is on the cash flow. What trend do you expect from working capital for the coming two quarters? The last question on the LatAm region. Can you elaborate a little more on the trend expected in Argentina, Mexico, and Brazil on the coming quarters, and what kind of feedback have you received from the program of national companies entering to 2022 for these three countries? Thank you. Thank you, Luigi. On the first point on pricing and on the, let's say, the Pipe Logix perspective, we have seen the Pipe Logix rising fast, very fast in everything that is related to welded product, OCTG, and line pipe. I would ask Luca on how we see this moving in the coming months. Yes, Paolo. Good morning, Luigi. I believe that the answer to your question is an affirmative yes. We see the trend going ahead, and maybe improving, given the number of reasons that I tried to explain already before. Activity increasing, consumption, specific consumption increasing, inventory being down, the relative difficulties of ERW. Short answer is yes, we will see Pipe Logix to increase and continue to increase through the end of the year and given the reasons that I just mentioned. Yeah. Thank you. On the second question on the cash flow, well, in this quarter, in the second quarter, our cash flow increased more than we expected at the beginning of it. This is also part of a decision. Seeing some increase in the raw material, we took some decision to increase stock for some. For instance, in the current case of iron ore for Argentina, we decided to bring in a little more, considering that the price evolution was going up. We increased the level of inventory, and also the price, the cost of this went up pretty fast, and that is part of the reason why our working capital has been higher in the second quarter. We expect this to continue to some extent in the 3rd Q. This time, we will continue to increase the working capital because the market is growing, because the prices are going, and because the cost of our input are also growing. We will have some increase in the working capital in the 3rd Q also. I think that everything will stabilize, and there shouldn't be additional increase in the 4th Q. The third question, well, I would be very brief. Frankly, we do not see any substantial change in the trend. Argentina is developing gas, need to develop gas. The price of LNG is very high. The government is supporting the development of Vaca Muerta to supply the country with gas. This is supporting a reasonable level of drilling and activity. We even have some record in fracking last month compared to the past. Activity will continue now at that level. Also, there may be some more activity for developing oil for export, but it will depend for the evolution of the Brent price. In Mexico, also, I have Pemex and the private companies, international oil companies proceeding with their project, but without big increase or decrease of their level of activity in the coming quarter. It looks to me relatively stabilized. We shouldn't expect big changes in this. In the case of Brazil, as I mentioned in my opening remark, Brazil is moving on on some very interesting deepwater project in which we are present with our welded and seamless and sophisticated line of product. Still, we do not see large pipelines as in the past, but a level of activity that is sustained without even here abrupt change in the level of demand from Petrobras or from the joint venture operating offshore. Thank you, Richard. Thank you, Paolo. Thank you. Our next question goes to the line of Marc Bianchi from Cowen. Your line is now open. Hi, thank you. I wanted to follow up on the dividend. If I take the outlook for third quarter here and multiply it by four, you're kind of back to where you were in 2019, in terms of EBITDA generation, and you had no problem paying that prior dividend. I'm just curious if the outlook is any different now, if you want to hold on to more cash for whatever reason, or how you're thinking about the potential to restore the dividend to the prior level. Well, the world today is very volatile. There are many risks around from different regions. This will be left to the board decision in November. They will consider overall the situation, and they will take a decision on dividend for Tenaris, as they did in the past. Okay, thank you. Thank you. At this time, I'm showing no further questions. I would like to turn the call back over to Giovanni Sardagna for closing remarks. Thank you, Gigi, and thank you all for joining us in our conference call, and see you soon. Thank you. Thank you very much to everybody. Thank you. This concludes today's conference call. Thanks for participating. You may now disconnect.